[...] Neither the financial advisor nor the plan administrator is liable for results. Under the new scheme, a much larger portion of the same pot of retirement money could be extracted in fees to support the careers of many more financial advisors and services, since now everyone gets a customized, personal account.

Financial firms also won a vast pool of new clients with very little financial acumen and no real bargaining power—a far cry from the professional, corporate pension managers of the past. The industry made every effort to market retirement plans as tools of empowerment for individuals. As their own marketing research shows, however, they were actually pitting the unique weaknesses of individual investors against themselves, leveraging the investors’ ignorance of the marketplace and its rules, as well as known gaps—what gamers would call “exploits”—in people’s financial psychology [...]

At one well-meaning Southern California fitness app startup I visited regularly, the young founders held weekly meetings at which the chief technology officer would educate his engineers on different aspects of the development process. But as time went on, he grew less likely to lecture on programming biofeedback interfaces than on business strategy. It was as if he had cracked a new sort of code. He spoke of scalable solutions, long-term contracts, and high switching costs—steps they could take to ensure “defensible outcomes” and achieve a “platform monopoly.

He had fully accepted the startup playbook’s emphasis on massive growth above all else and was now turning his tremendous capacity for programming toward that singular, highly limited ambition. The product was less important now than the prize. He and his partner were not in a position to entertain a true disruption of the marketplace, anyway. They had won one of those pitch-your-idea contests by coming up with an idea literally overnight. The venture capital flowed in days later, and these kids were—like so many other young entrepreneurs who accept tens of millions of dollars up front—obligated to build a company worth a billion dollars.

[...] As long as there is a chance, however small, for a company to become a billion-dollar supersuccess, the investor would rather push on. This means abandoning even surefire profit models if they aren’t going to generate the outlandish returns required by the venture capitalist’s overall portfolio strategy. He or she would prefer to let the company die, squeezing out every possible megawin, than let it carry on as a moderately successful enterprise. Without a major exit through acquisition or IPO, it is worthless on the level that venture capitalists are playing the game.

I’ve sat in on more than one board meeting, watching as investors teach their young company founders about the realities of the startup landscape and why they have to shoot for the stars. Every company must become the universal solution in its vertical—or more. You are not just a personal health app; you are the platform through which all health apps will be executed! You are not just a game; you are a gamification operating system and social network!

So they accept the hypergrowth logic of the startup economy as if it really were the religion of technology development. They listen to their new mentors and accept their teachings as gifts of wisdom. These folks already gave me millions of dollars; of course they have my best interests at heart. [...] The founders’ original desires for a realistic, if limited, success are quickly replaced by venture capital’s requirement for a home run. Before long, they have forgotten whatever social need they left college to serve and have convinced themselves that absolute market domination is the only possible way forward. [...]

While these may be democratic developments, they’re also as sure a sign of a bubble as any we’ve seen. Opening the floodgates to more angel investment doesn’t mean there will be a greater number of successful startups; it simply means more money will come in at the very top of the funnel. More startups get funded, but a smaller percentage of them survive and pay off. We’re back to net-exacerbated winner-takes-all extremes. Under the pretense of individual empowerment, unsophisticated investors enter a market where good information is even scarcer than it is on Wall Street. True, they have proxied their participation to more experienced investors, but those investors are now competing to find winners in an even more crowded marketplace. The more authority amateur investors gain over the placement of their funds, the more likely they are to be exploited as the lowest levels in new pyramids.

The most ambitious commons-inspired project to date, the Ecuadoran government’s “Free, Libre, Open Knowledge” program, or FLOK, seeks to transform the entire nation from its current extractive, oil-based economy to one based on a protected commons of both real and digital resources. Under these policies (still in development), intellectual property would be considered part of the commons. This would lead to the creation of hyperlocal factories, schools, and labs, freed from the constraints of licensing fees. So the thinking goes, this would then allow companies to operate with greater fairness, efficiency, and sustainability. The FLOK project originates with a specific set of Latin-American socioeconomic concerns. Foremost among these is “biopiracy,” the practice of industrial agricultural companies such as Monsanto, which patent organic technology developed over centuries by local and indigenous farmers. Here in the United States, we can find an analogue in the practice of tech giants such as Apple or Google, that rely on the open-source commons for many of their products’ architectures, profiting without paying back into the digital commons. In response to these challenges, FLOK proposes the development of peer-production licenses under which only commoners, cooperatives, and nonprofits would enjoy free usage of intellectual property bounded by the commons; corporations would have to pay.

At first glance, the so-called “sharing economy” appears to be based in these commons principles. At least in some superficial way, this is true. We have gone from buying music on records or CDs to downloading MP3 files to simply subscribing to Pandora or Spotify. Owning music—or a car, for that matter—is becoming less important than having access to it. This is certainly a step on the path from hoarding to sharing. Except the many sharing platforms and services are not sharing at all but renting. We don’t collectively own the vehicles of Zipcar any more than we collectively own Spotify’s catalogue of music. And as private companies induce us to become sharers, we contribute our own cars, creativity, and couches to a sharing economy that is more extractive than it is circulatory. Our investments of time, place, and materials are exploited by those who have invested money and actually own the platforms.

Now that we can see it, however, we can also envision the alternative: we join and form businesses that value our real investments of effort, stuff, and community resources. Imagine an Amazon owned by the sellers, an Uber owned by the drivers, or a Facebook owned by the people whose data and attention is being bought and sold. Distributed digital technology makes this not only possible but preferable to the locked-down, overprogrammed, and extractive platform monopolies of today. [...]